Managing Strategic IT Investment Decisions From IT Investment Intensity to Effectiveness

2002 ◽  
pp. 141-157
Author(s):  
Tzu-Chuan Chou ◽  
Robert G. Dyson ◽  
Philip L. Powell
Keyword(s):  
Decision Making ◽  
Information Technology ◽  
Analytical Model ◽  
Investment Decisions ◽  
Evaluation Process ◽  
Empirical Testing ◽  
It Investment ◽  
Organizational Decision Making ◽  
Information Technology Projects ◽  
Strategic Investment

Many information technology projects fail, especially those intended as strategic. Yet, there is little research that attempts to explain the link between the IT investment intensity of strategic investment decisions (SIDs) and organizational decision-making, in order to understand this phenomenon. This paper proposes an analytical model employing a number of constructs: effectiveness of decisions, interaction and involvement in the decision-formulating process, accuracy of information and strategic considerations in the evaluation process, rarity of decisions, and the degree of IT intensity of an investment in strategic investment decisions. The model explores the relationships influencing the effectiveness of decisions. Empirical testing is based on a sample of 80 SIDs from Taiwanese enterprises. The results show that interaction, accuracy of information, and strategic considerations are mediators in the linkage of IT investment intensity and the effectiveness of SIDs. The implications of these findings for the management of strategic IT investment decisions are discussed.

Strategic IT Investment Decisions

2011 ◽  
pp. 3589-3593
Author(s):  
Tzu-Chuan Chou ◽  
Robert G. Dyson ◽  
Philip L. Powell
Keyword(s):  
Organizational Performance ◽  
Decision Process ◽  
Investment Decision ◽  
Investment Decisions ◽  
Decision Processes ◽  
It Investment ◽  
Strategic Investment ◽  
Integrative Framework ◽  
Concept Of Information ◽  
Information Intensity

As many as half the decisions taken in organizations result in failure (Nutt, 1999). As information technology (IT) assumes a greater prominence in firms’ strategic portfolios, managers need to pay more attention to managing the technology. However, while IT can have a significant impact on organizational performance, it can also be a major inhibitor of change and can be a resource-hungry investment that often disappoints. Organizations can best influence the success of IT projects at the decision stage by rejecting poor ones and accepting beneficial ones. This may enable better implementation, as Nutt (1999) suggests most decision failures are due to implementation failure that tends to be under managers’ control. However, little is known about IT decision processes. Research demonstrates the importance of managing strategic IT investment decisions (SITIDs) effectively. SITIDs form part of the wider range of corporate strategic investment decisions (SIDs) that cover all aspects in which the organization might wish to invest. Strategic investment decisions will have different degrees of IT intensity that may impact outcome. IT investment intensity is the degree to which IT is present in an investment decision. That is, some decisions will be wholly about IT investments while others will have little or no IT—most, though, will be blended programs of IT and non-IT elements. Here, IT investment intensity is defined as the ratio of IT spending to total investment. The higher the IT investment intensity, the more important IT is to the whole investment. For example, Chou, Dyson, and Powell (1997) find IT investment intensity to be negatively associated with SID effectiveness. The concept of IT intensity is similar to, but also somewhat different from, the concept of information intensity. Information intensity is the degree to which information is present in the product or service (Porter & Millar, 1985). Management may use different processes in order to make different types of decisions (Dean & Sharfman, 1996). The link between decision process and outcome is so intimate that “the process is itself an outcome” (Mohr, 1982, p. 34). This may imply that the link between IT investment intensity and SID effectiveness is not direct but that the impact of IT investment intensity may be through the decision process. If different IT intensity in projects leads to different decision processes, leading to different outcomes, then it is important to know what factors act in this, in evaluating and managing SITIDs. This chapter presents an integrative framework for exploring the IT investment intensity-SID effectiveness relationship.

AMERIREAL Corporation

2011 ◽  
pp. 21-31
Author(s):  
Mo Adam Mahmood ◽  
Gary J. Mann ◽  
Mark Dubrow
Keyword(s):  
Information Technology ◽  
Organizational Performance ◽  
Investment Decisions ◽  
Optimal Investment ◽  
Student Thinking ◽  
It Investment ◽  
The Subject ◽  
Case Based

This instructional case, based on an actual firm’s experience (name changed) is intended to challenge student thinking with regard to the extent to which information technology (IT) can demonstrably contribute to organizational performance and productivity, and to which users of IT can relate their investment decisions to measurable outcomes. Relationships between an organization’s investment in IT and the effect of such investments on the organization’s performance and productivity have long been the subject of discussion and research. Managers, interested in knowing the “payoff” of such investments, are continually seeking answers to this question. A failure to understand the benefits of IT investment, or an over- or under-estimation of the benefits of a planned investment in IT relative to the costs, will likely result in less than optimal investment decisions.

Managing Strategic IT Investment Decisions

2005 ◽  
pp. 1875-1879
Author(s):  
Tzu-Chuan Chou ◽  
Robert G. Dyson ◽  
Philip L. Powell
Keyword(s):  
Organizational Performance ◽  
Investment Decision ◽  
Investment Decisions ◽  
Decision Processes ◽  
It Investment ◽  
Strategic Investment ◽  
Intensity Information ◽  
Total Investment ◽  
Concept Of Information ◽  
Information Intensity

IT can have a significant impact on organizational performance, but it can also be a major inhibitor of change and can be a resource-hungry investment that often disappoints. Organizations can best influence the success of IT projects at the decision stage by rejecting poor ones and accepting beneficial ones. However, little is known about IT decision processes. Research demonstrates the importance of managing strategic IT investment decisions (SITIDs) effectively. SITIDs form part of the wider range of corporate strategic investment decisions (SIDs) that cover all aspects that the organization might wish to invest in. SIDs will then have different degrees of IT intensity that may impact on outcome. IT investment intensity is the degree to which IT is present in an investment decision. Here, IT investment intensity is defined as the ratio of IT spending to total investment. The higher IT investment intensity, the more important IT is to the whole investment. For example, Chou et al. (1997) find IT investment intensity to be negatively associated with SID effectiveness. The concept of IT intensity is similar to, but also somewhat different from, the concept of information intensity. Information intensity may be defined as the degree to which information is present in the product or service of a business (Porter & Millar, 1985).

Financial Appraisal and the IS/IT Investment Decision Making Process

1998 ◽  
Vol 13 (1) ◽  
pp. 3-14 ◽  
Author(s):  
Joan Ballantine ◽  
Stephanie Stray
Keyword(s):  
Decision Making ◽  
Information Technology ◽  
Capital Investment ◽  
Investment Decision ◽  
Decision Making Process ◽  
It Investment ◽  
It Investments ◽  
Investment Appraisal ◽  
Investment Decision Making ◽  
Financial Appraisal

This paper explores the techniques used by organizations to appraise Information Systems (IS)/Information Technology (IT) investments, and concentrates, in particular, on techniques of capital investment appraisal. We draw on relevant studies reported in both the accounting and finance, and the IS literature, which have addressed their usage. Where possible comparisons are drawn between both sets of literatures. The results of a survey that specifically examined IS/IT investment appraisal practices of a sample of UK companies is also presented. Among the issues discussed include the extent to which capital investment appraisal techniques are used to appraisal investments, the importance of the techniques used and the problems attendant on the decision making process.

THE EVALUATION OF INFORMATION TECHNOLOGY PROJECTS: A FUZZY MULTICRITERIA DECISION-MAKING APPROACH

2006 ◽  
Vol 05 (01) ◽  
pp. 89-122 ◽  
Author(s):  
NIKOLAOS S. THOMAIDIS ◽  
NIKITAS NIKITAKOS ◽  
GEORGIOS D. DOUNIAS
Keyword(s):  
Decision Making ◽  
Information Technology ◽  
Multicriteria Decision Making ◽  
Evaluation Framework ◽  
Information Technology Projects ◽  
Alternative Technologies ◽  
Domain Specific ◽  
Eu Project ◽  
Sets Theory ◽  
Fuzzy Linguistic

This paper presents a fuzzy set-based approach to the evaluation of information technology (IT) projects. We assume a multi-criteria decision-making framework, where sets of general and domain-specific criteria are used to judge the relative performance of alternative technologies. The methodology was originally developed for DIAS.net, an EU project aiming at the development of the Information Society in insular and isolated regions of Europe. In this paper, we present many aspects of our evaluation framework, including the synthesis of evaluation teams, the assessment of the importance of criteria, the evaluation of the performance of the alternatives and the final ranking and selection of projects. The methodology presented has the innovative feature of embodying techniques of fuzzy sets theory into the classical multi-criteria decision analysis. This combination enables us to handle efficiently the subjectiveness that often characterizes expert judgements on a decision problem. Fuzzy linguistic terms, such as "poor," "fair," "very important," etc. are proposed for assessing the relative merit of alternatives and criteria. The paper concludes by exploring the potentiality of the above methodology in providing a flexible and robust IT evaluation framework.

Methods for measuring information technology investment payoff

1998 ◽  
Vol 17 (2) ◽  
pp. 145-153
Author(s):  
H. Joseph Wen ◽  
David C. Yen ◽  
Binshan Lin
Keyword(s):  
Information Technology ◽  
Decision Maker ◽  
Evaluation Process ◽  
It Investment ◽  
Technology Investment ◽  
Advantages And Disadvantages ◽  
Road Map ◽  
Information Technology Investment ◽  
Intangible Benefits ◽  
Risks Factors

Measuring information technology (IT) investment payoff is difficult. This is because most of IT benefits are qualitative, indirect, and diffuse. To actually measure IT investment payoffs, tangible and intangible benefits factors as well as risks factors must be identified and evaluated. This research studies ten major evaluation methods, and available models that fall under each method, showing their advantages and disadvantages in handling the above difficulties. A road map to guide the decision maker in choosing the most appropriate methodology in his/her evaluation process is provided.

AMERIREAL Corporation

2011 ◽  
pp. 98-109
Author(s):  
Mo Adam Mahmood ◽  
Gary J. Mann ◽  
Mark Dubrow
Keyword(s):  
Information Technology ◽  
Organizational Performance ◽  
Investment Decisions ◽  
Optimal Investment ◽  
Student Thinking ◽  
It Investment ◽  
The Subject ◽  
Case Based

This instructional case, based on an actual firm’s experience (name changed), is intended to challenge student thinking with regard to the extent to which information technology (IT) can demonstrably contribute to organizational performance and productivity and to which users of IT can relate their investment decisions to measurable outcomes. Relationships between an organization’s investment in IT and the effect of such investments on the organization’s performance and productivity have long been the subject of discussion and research. Managers, interested in knowing the “payoff” of such investments, are continually seeking answers to this question. A failure to understand the benefits of IT investment, or an over- or under-estimation of the benefits of a planned investment in IT relative to the costs, will likely result in less than optimal investment decisions.

Framework Based on Benefits Management and Enterprise Architecture

2014 ◽  
pp. 289-309
Author(s):  
António Rodrigues ◽  
Henrique O’Neill
Keyword(s):  
Enterprise Architecture ◽  
Investment Decisions ◽  
Public Cloud ◽  
It Infrastructure ◽  
Private Cloud ◽  
It Investment ◽  
Strategic Investment ◽  
The Public ◽  
International Bank

In 2010, a framework aiming to address strategic investment decisions on IT infrastructure was developed. It was based in Benefits Management principles and Enterprise Architecture concepts, being inspired by the emerging public cloud technological trend. Meanwhile, the public cloud concept did not materialise at the expected pace and other alternatives have emerged in the market, in particular the private cloud-based solutions. This fact required the framework to be updated to cope with the business and technological requirements of the private cloud concept. A new version of the framework has been developed and was used to help managers to address IT investment decisions on private cloud in an international bank.

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